The Ledger
Every statement that passed quotation and attribution checks. Mix any filter with any other: certainty 1/5, debate potential 5/5, or both at once.
why aren't all 26 resolved? a statement only gets an assessment when the public record can support or contradict it. opinions and what-ifs never can, and 1 checkable ones are still open, waiting for their date. predictions held up or didn't; assertions are supported or contradicted. on every card: ▮▮▮▮▮ certainty · ▮▮▮▮▮ debate potential. speakers are clickable
Shen: Growth-adjusted private SaaS valuations remain reasonable relative to public markets
“That means in the last two years, despite seemingly high private company valuations it actually shows on a growth-adjusted basis, private valuations have actually been fairly reasonable.”
Shen: The 70-50-30 efficiency rule for scaling SaaS companies
“The BVP efficiency rule says if you're greater than thirty million in revenue, you just have to remember three numbers. 70, 50, 30. And that's because when you're expansion stage company and you're, call it 30 to sixty million in ARR, 40 is actually too low of…”
Shen: Cloud software investment quadrupled in six years, taking 50% of VC
“If you look at what's been invested in cloud software, it has literally quadrupled in a six year time period and represents about 50% of total venture capital funding”
Shen: Early-stage private SaaS growth accelerated from 170% to 250% by 2018
“In 2011, they were growing on average of a 170%. These are companies that are between one and twenty million ARR. Today, they're growing about 250%.”
Shen: Top SaaS companies scale from $1M to $10M in two years
“If you are a good company, you got from one to ten million in AR in just four years. That means you did a little better than a double, double, double, double, and you're on the same growth trajectories as companies like Cornerstone and Mindbody. If you're in t…”
Shen: CAC payback benchmarks for SMB, mid-market, and enterprise SaaS
“If you are a mid-market company, 12 month probably is your right number. But if you're selling to enterprise and you've got hundred K ACV deals, you're driving great upsell, you should think of everything as an LTV to CAC ratio. So if you've got a higher LTV, …”
Shen: Bessemer's initial investment memo gave ServiceTitan a 2% chance at $1B
“I remember way back in the day when we were at Bessemer, it's myself, Byron Dieter, and Tyler Goldberg. We wrote now this very famous memo about service sign. I think we put, what do we say, a two percent chance at a billion dollar outcome.”
Shen: Figma Raised $50M Before Generating Its First Dollar of Revenue
“Most people don't realize they actually raised fifty million dollars before actually generating their first dollar of revenue.”
Shen: Startups Over $5M–$10M ARR Should Prioritize CAC Payback Over Burn Multiples
“My big recommendation is for later stage companies, particularly if you're five, if not ten million AR and higher, to definitely start measuring your business by a CAC payback, because it's a true measure of new revenue that you're generating from your sales a…”
Shen: The 2009-2019 Bull Market Is the Longest in S&P 500 History
“The longest bull run is actually right now. Starting after oh nine until today, it's been roughly 10 years of a bull market, which has just been incredible. If you think about the history of the S&P 500, going back over, ah, 70 years, this is the longest bull …”
Shen: Median public cloud company scales $1M to $100M ARR in seven years
“Well, we look at all the public companies, about 55 in total. The median got there in about seven years. The top quartile companies got there in about five years, and the bottom quartile, which were all very successful cloud companies, took about 10 years to g…”
Shen: Efficient businesses receive outsized valuation rewards in flat and bear markets
“Ah, valuation is correlated to revenue growth, but in all other times, whether it be flat or bare markets, it's actually efficient businesses that are unfairly rewarded for their efficiency levels, and so we believe it's best to solve for an efficient business…”
Shen: Early-stage cloud companies should target a 0.5x to 1.5x efficiency score
“What we see across our portfolio and in the industry is you want to be between .5 and a 1.5 X ratio.”
Shen: Private cloud multiples expanded from 1.5x to 2.5x of public multiples
“To be exact, in 2011, private multiples were about 1.5 X out of public companies. But today, they're about 2.5 X.”
Shen: Top quartile cloud companies reach $100M ARR in 5 years
“We mapped the 43 top cloud companies out there, and looked at the top, median, and bottom quartile. And we saw that the top quartile gets from one to a hundred million in just five years. The median in seven, and the bottom quartile in just over 10.”
Shen: SaaS efficiency score averages 73% pre-IPO and 32% post-IPO
“Three years pre IPO, the average efficiency score is 73%. Three years post IPO, the average efficiency score is 32%, and so when you're a private early stage company, your efficiency is driven so much by your revenue growth, but as you mature and scale to beco…”
Shen: SaaS companies under $30M ARR should generate more ARR than burn
“We recommend you look at what is your net new ARR relative to your net cash burn, and that ratio should be greater than one.”
Shen: CAC spend typically splits equally across sales reps, marketing, and support
“And so we bucket all these metrics into three core inputs, which is sales rep productivity, marketing spend, and sales support. And roughly what we've seen from companies is this tends to be a third of your total spent.”
Shen: Top-quartile public SaaS multiples fell from 24x to 8x revenue
“And if you look at the top quartile at the peak, so the top 25% of SaaS and cloud companies in the public markets, they're trading at 24 times revenue. Over the last, ah, nine or 10 months, that has now dropped to eight times. That is one-third of what they us…”
Shen: Slack scaled from $1M to $100M ARR in under three years
“Slack got there actually pretty quickly, and they're not quite a public company yet, but as we all know, they've filed for their direct listing quite soon, and they got there in just under three years.”
Shen: Mid-market SaaS should target 80-90% gross and 90-120% net retention
“If you're selling to the mid-market, let's say, you've got average deal sizes that are, let's say, 12 to 50 K a year, you're really targeting an 80 to 90% gross retention, and a 90 to a 120% net retention.”
Shen: Cloud multiples peaked at 10x ARR in March 2014
“Now what's really interesting is the peak of the market was actually March, 2014, where companies are trading at 10 times ARR multiple.”
Shen: Public cloud multiples are trading around 10x in 2019
“Well, today, revenue multiples are quite hot. It's a great time to fundraise. Roughly at 10 times revenue multiples in the public markets.”
Shen: Shopify grew from $12M to $24M ARR burning only $2M
“Well, if you take a look at Shopify, they were twelve million ARR in year one, and grew to twenty four million ARR in year two. And so they had an increase of twelve million in net new ARR, but only burned two million to do it. And so they had a six X BVP effi…”
Shen: Resilient cloud companies should target a GRIT score above 3
“So if you look at your grit score, we recommend that good, better, best grit score should be between three and six, and even higher than six for the best grit companies.”
Shen: Twilio reached 300% growth and 160% net retention at Series A
“Twilio is a great example when they were a series A company of a retention driven score. And so they had a 300% growth, 160% net retention, two years of cash burn left, and a 1.5 X efficiency. So when you sum that all together, they had a phenomenal grit score…”